Evaluating the impact of the single exit price policy on a basket of originator medicines in South Africa from 1999 to 2014 using a time series analysis

Abstract

Abstract Background Affordability and availability of quality medicines to all its citizens has been a key priority area for South Africa since democracy in 1994. In order to introduce transparency in the private market the government introduced the Single Exit Price (SEP) for medicines in 2004, for all prescription medicines, comprising of a fixed ex-factory price with a logistics fee component (and value added tax) for medicines sold to all purchasers other than the State. This is complemented with a provision for an annual regulated maximum percentage increase. The study evaluates the impact of the SEP on a basket of originator medicines, in terms of costs, immediate price reductions and projected price reductions. Method This is an analytical, quantitative study. A basket of medicines was selected, based on the WHO/HAI list, and adapted to include registered medicines in South Africa. Prices of 50 originator medicines were assessed from 1999 to 2014 in terms of the single exit price and the changes in prices in accordance with legislation using a time series analysis methodology. Results Of the 50 originator medicines investigated 35 showed a statistically significant change in level. For the Global Core list, the percentage change ranged from 2.45–39.12% (mean = 19.87%, SD = 10.62%, IQR = 10.2%). The range for the Regional Core list was 1.77–42.17% (mean = 23.38%, SD = 12.43%, IQR = 15.65%). The Supplementary list was 11.68–55.86% (mean = 22.97%, SD = 16.26%, IQR = 17.34). This study indicates that the SEP regulation had an impact on medicine pricing in South Africa in both the short and long term. Most medicines investigated showed a smaller yearly increase in price compared to before regulations due to the controlled pricing environment introduced by Government. Conclusion This study provides evidence of the impact of medicine pricing intervention from a middle–income country, and other developing countries looking at introducing medicine price controls can draw useful lessons.

Keywords

• Single exit Price
• South Africa
• Time series
• Medicine pricing policy